My decision on proposed mixed-use development, including Target store, at Sheridan and Devon

May 16, 2017

Dear Neighbor,

I am writing to inform you of my decision on a proposed seven-storymixed-income and mixed-use development on the 6400 block of N. Sheridan that would include both market rate and affordable rental housing and a small“flexible format” Target store.

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The proposal requires a “business-residential planned development” designation from theChicago Plan Commission and the Chicago City Council.

After careful consideration of the opinions and suggestions of the 49th Ward Zoning and Land Advisory Committee and the scores of residents who attended the various meetings or corresponded with my office, I have decided to SUPPORT the proposed development.

Below are the details of the proposal and my reasons for supporting it:

I. The Proposal

What does the proposal call for?

The Chicago Housing Authority (CHA) and a private developer, Three Corners Development, entered into a joint venture to develop CHA-owned property located directly north of and adjacent to the Caroline Hedger Apartments, a 22-story senior citizen apartment building on the northwest corner of Sheridan and Devon (see photo below). A community room and parking lot for the Caroline Hedger Apartments currently rest on the property.

Under the terms of the agreement, the CHA is leasing the property to Three Corners for 99 years to develop the site for affordable and market rate housing and retail use.

Three Corners proposes to build a seven-story mixed-use development with 111 one- and two-bedroom apartment units and 29,400 square feet of ground floor commercial retail space. Known as the “Concord at Sheridan,” the proposed building would be approximately the same height as the “Morgan,” the building immediately to its north. Sixty percent of the units (65 units) will be reserved for CHA residents and the remaining 40 percent (46 units) will be rented at market rates.

Three Corners is subleasing 23,000 square feet of the commercial space to Target for one of the company’s new flexible format stores, which are considerably smaller than their “big box” stores.

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Target will pay the market rate rent for commercial space in the area as part of its lease agreement with the developer. The lease calls for a term of 15 years with four five-year options to renew. Thus, the total potential length of the lease is 35 years.

Under the terms of its agreement with Three Corners, the CHA will own 40 percent of the Target/retail partnership and additionally will receive 40 percent of the Target/retail partnership development fee.

A commercial tenant remains to be identified for the remaining 6,400 square feet of retail space.

The proposed development also will include a new 5,000-square-foot community room with a roof-top deck terrace for the exclusive use of the residents of the Caroline Hedger Apartments to replace the room that will be demolished to make way for the development. During the demolition and construction, Three Corners has pledged to provide a temporary community room for the seniors at a Three Corners building located one block west of the Hedger Apartments.

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The proposed development also calls for 125 underground parking spaces for retail customers and residents of both the Concord and the Hedger Apartments.

Finally, the plan calls for a left-turn bay on Sheridan Road to allow northbound motorists to enter the garage without backing up Sheridan Road traffic. The plan also straightens the southbound lanes of traffic on Sheridan Road just north of Devon, eliminating the jog to the right that currently exists in the southbound lanes, a frequent cause of confusion for southbound motorists.

The development will create 450 construction-related jobs. I secured an agreement with the contractor, Madison Construction, to include local union card holder residents in some of the construction work. The development will also create 70 to 80 permanent jobs.

Once completed, the project will contribute an estimated $650,000 a year in sales and property taxes.

Below is a PowerPoint presentation that provides the proposed design, site plans, elevations, floor plans, parking layout, traffic circulation, and loading zones for the development. It also provides some information on the proposed Target:

What is the nature of the affordable housing units?

Frustrated with the unwillingness of the Republican-controlled Congress to provide adequate federal support for affordable housing, the Obama Administration created RAD to provide public housing authorities, such as the CHA, the ability to access stable and reliable funds from the private debt and equity markets. Those funds are used to maintain existing public housing and create additional public housing units without having to rely exclusively on scarce federal dollars. This requires the CHA to enter into partnerships with private developers, such as Three Corners, to provide it with much-needed revenue.

The units created under RAD remain permanently affordable to low-income households. CHA residents in a RAD development pay 30% of their income towards their rent, just as they do in traditional public housing, and maintain all their tenant rights and protections.

As the CHA owns the property, why doesn’t the CHA simply build a development that is devoted entirely to public housing?

Securing private financing through the private developer and accessing revenue from the Target lease gives the CHA the ability to create and, equally important, maintain units of affordable housing, without having to resort to limited and dwindling federal funds. In short, the RAD program allows the CHA over time to build and maintain more affordable housing than if it simply relied solely on traditional federal sources of funding.

Further, the federal court decrees in Gautreaux vs. the Chicago Housing Authorityrequire the CHA to mix public housing with market-rate units and distribute the public housing throughout each development. In other words, the CHA likely would violate these court decrees if it simply constructed over 100 units of public housing in a single building with no market rate housing.

That said, this proposed development will have afar greater percentage of public housing than any other CHA mixed-income housing development. The vast majority of mixed-income developments contain one-third public housing, one-third below-market-rate housing and one-third market rate housing.

In contrast, 60 percent of the units in the proposed development will be set aside for public housing, nearly three times the usual percentage of public housing in mixed-income developments.

What are the projected rents for the market-rate units?

The estimated range for market rents for one-bedroom, one-bath units is $750 to $1,000. And for the two-bedroom, two-bath units, it is $1,425-$1700.

What are the details of the proposed Target store?

Target proposes to build on the site one of it’s new “flexible format” stores. These stores cater to densely populated urban areas and nearby college campuses and are considerably smaller than the traditional “big box” Targets.

The flexible format allows the store to customize its goods and products to cater to local tastes. Chicago is currently home to three other small flexible format Target stores, including 401 E. Illinois in Streeterville (see photo on right), 2650 N. Clark in Lincoln Park, and 1346 E. 53rd in Hyde Park.

The proposed Target at Sheridan and Devon will be 23,000 square feet, about the size of a Walgreen’s. In comparison, the Target store in Uptown is 200,000 square feet, nearly ten times the size of the Target contemplated in the proposed development. The Target store on Peterson is 160,000 square feet and the Evanston store is 132,000 square feet.

As noted above, Target will pay rent to the developer at a market price, of which the CHA will receive 40 percent of the proceeds.

Target plans hire 40 full and part-time employees and has pledged to hire from the Rogers Park and Edgewater communities. At my request, Target met with Sullivan High SchoolPrincipal Chad Adams and pledged to put in place a hiring program for qualified Sullivan students and their family members.

Why Target? Why not an assemblage of small, locally-owned businesses? Or simply no retail at all?

In order to obtain the requisite financing from banks and other financial institutions, and support the RAD Program, the development requires a retail anchor that has the financial capacity and credit of a Target or similar national “credit tenant.”

By definition a credit tenant is a tenant that has been awarded an investment grade rating based on its size and financial strength. Moody’s, Fitch, and Standard & Poor’s are the three major credit rating agencies.

An investment grade rating is significant to potential lenders because it indicates the tenant will most likely have the means to continue paying rent, even in a volatile economy, and ensures the CHA will receive a steady revenue stream to support its mission.

The presence of a Target not only helps ensure the financial viability of the project, but it is in keeping with the goals of the Gautreaux federal court decrees, which recognize that planning for new mixed-income developments must go well beyond housing in an effort to build sustainable, complete communities. Retail amenities, such as a Target, and the jobs they bring, help achieve those goals.

Did the CHA and Three Corners consider other retail tenants?

Several potential tenants were vetted during the project planning phase and two were able to provide the necessary credit to get the project entitled and financed. The CHA and Three Corners selected Target as the retail tenant that would best fit with the project as proposed and provide neighborhood residents with retail amenities, such as apparel and housewares, that are not currently available in the vicinity.

The other potential retail finalist would have required a two-story retail footprint, engendered far more vehicular traffic, and offered products that competed directly with nearby merchants.

II. My Reasons for Supporting the Proposed Development

I support the proposed project for three reasons– it will provide much-needed affordable housing, create jobs, and offer retail amenities not currently found in our community. In addition, the development enjoys the overwhelming support of the community.

The development will bring more affordable housing, jobs and retail amenities to Rogers Park

First, at a time of rising rents in our neighborhood, the project will provide65 quality affordable public housing units. As chairman of the City Council Committee on Housing and Real Estate, I am acutely aware of the shortage of affordable housing on the north side of our city.

Recently, seven of my north-side aldermanic colleagues held a press conference pledging to build at least 50 CHA-sponsored apartments in each of their wards by the end of their current term. I’ve gone beyond that goal in just this development alone, with 65 units of affordable housing slated for creation, and will continue to search for opportunities to build affordable housing to ensure that our neighborhood is home to people from all economic circumstances.

Second, the development will create 450 construction-related jobs and 70 to 80 permanent jobs. Target has a strong reputation for local hiring and supporting the communities in which it operates. They have already agreed to work with Sullivan High School on a hiring program for students and their family members. This means more money coming into Rogers Park with much of it staying in our community.

Third, the new Target will bring to Rogers Park retail amenities that are sorely lacking, such as housewares, linens and apparel. Rogers Park residents in need of simple housewares such as kitchen gadgets and containers, or linens are required to travel outside the neighborhood to purchase those items. And with the exception of Marshall’s in Gateway Plaza on the far north side of Rogers Park, neighborhood residents must also travel outside the community to purchase basic items of clothing.

The Target will help us keep some of our dollars in our own neighborhood rather than “leaking” them to surrounding communities.

The development has garnered widespread community support

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A broad cross-section of our community, including business and community leaders and ordinary residents, has expressed strong support for the proposed development, including the Target. Nearly 2,600 area residents signed a petition in support of the development. The vast majority of those signing the petition, including 58 residents of the Carolyn Hedger building next door to the site, live in the 49th Ward (see graphic on left).

I’ve received letters of support from community organizations, such as the Rogers Park Business Alliance, Loyola University, Housing Opportunities for Women, the Rogers Park Builders Group, the Rogers Park-West Ridge Historical Society, and Chad Adams from Sullivan High School.

I’ve also received letters of support from the owners of the following local businesses located within two or three blocks of the proposed Target: Anytime Fitness, ChiTown Magpie, Clarke’s Rogers Park, Cozy Corner, Ethiopian Diamond, Little Lagos Ethnic Market and Fabrics, Lord Properties, Metro PCS, and Third Coast Comics.

III. My Response to the Arguments Offered in Opposition to the Proposed Development

Those who have voiced opposition to the proposed development generally raise three concerns. 1. The Target allegedly will exacerbate traffic congestion on Sheridan and Devon, 2. The Target allegedly will put locally-owned stores out of business, and 3. The proposed development allegedly will hurt the senior citizen residents of the Carolyn Hedger building. Allow me to address each of these concerns.

The proposed Target will not generate the traffic of an ordinary “big box” store and experts believe it will have minimal effect on Sheridan Road

A left turn bay for northbound traffic turning into the development will allow for at least four cars to “stack” without impeding the flow of northbound traffic. And the southbound lanes will be straightened to eliminate the inexplicable jog to the right, which often confuses motorists traveling southbound on Sheridan (see graphic on right).

The proposed 23,000 square-foot Target will be about the size of a Walgreen’s and about one-sixth to one-tenth the size of an ordinary “big box” Target. Most customers in Target’s flexible format stores in urban areas generally arrive by foot, not automobile, and the proposed Rogers Park store, with its close proximity to Loyola University, is unlikely to be an exception.

Nevertheless, I am well aware of the serious traffic and pedestrian issues at the Devon and Sheridan intersection. My colleague, 48th Ward Alderman Harry Osterman, and I are working with the Chicago Department of Transportation to explore additional improvements to the intersection of Sheridan and Devon that would allow for better traffic flow and a more pedestrian friendly environment. We hope to announce the details of some initial improvements in the near future.

The proposed Target will provide retail amenities that are not currently available in the neighborhood

Some have expressed concern that the Target may force some locally-owned businesses to close their doors. But as I note above, most of Target’s products, such as housewares, linens and clothing are not currently carried by locally owned businesses, and hence Target does not serve as a direct competitor. Instead, Rogers Park residents will benefit from not having to travel outside the community to purchase these items.

Target will devote about 15 to 20 percent of its flexible format floor space to fresh/organic food stuffs, prepared foods and “grab and go” items and some have expressed concern this could compete with local grocers, such as Devon Market. However, Devon is a full-service grocery store that offers a wide range of ethnic foods, appealing to our very diverse constituency. In contrast, Target is planning a store of convenience, not a location to “stock-up” for weekly or bi-weekly grocery shopping.

Undoubtedly, Devon Market may lose a few food sales to Target, but Target in no way can be considered a direct competitor to Devon Market’s full-service ethnic offerings. The Aldi’s, which opened on Broadway a few years ago, and the Whole Foods, which opened just recently in Edgewater, provided far more direct competition to Devon than Target will provide. And Devon has survived the competition from those grocers.

Small business owner Sarah Blackstone, who owns and operates ChiTown Magpie across the street from the proposed Target, offered perhaps the most insightful business owner perspective on the new Target. Sarah wrote:

“As a resident and business owner in Rogers Park, I applaud this effort to bring business to Rogers Park and increase the foot traffic on the 6400 block of Sheridan Road. . . . There is room in Rogers Park for Target and small businesses. Our community is discerning and well-able to distinguish between everyday utilitarian items available from Target and locally produced gift items available in my shop. There is room for us all to do business in Rogers Park!”

The residents of the Caroline Hedger building will benefit greatly from the proposed development

In the most disappointing and disconcerting part of this debate, some individuals and activist organizations convinced a few of the residents of the Hedger building that they were going to lose their community room as a result of this development. As a result, about a half dozen Hedger residents have vocally opposed to the new development.

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Though the existing 50-year-old community room will be demolished to make way for the development, the seniors will receive a new community room that will be 5,000 square feet in size, slightly larger than the current community room (see floor plans on left).

The CHA has promised to give the residents of the building the power to determine how the room will be configured and equipped. And Three Corners has pledged to provide a temporary community room at their building located one block west of the Hedger Apartments for the seniors during the construction.

Additionally, the development calls for a private outdoor rooftop terrace garden above the community room. The CHA has promised to give the residents a great amount of input on how the roof-top terrace will be laid out.

Those senior citizen residents who own cars will receive 50 spaces of parking reserved just for them in the climate controlled parking garage located under the proposed development. The parking garage will be patrolled by security 24 hours a day. In contrast, the seniors previously received only 40 parking spaces in an unsecure outdoor parking lot, exposed to the summer heat and rain and the winter cold and snow.

Finally, the seniors will live just steps away from a new Target store, which will provide many retail amenities, including housewares and apparel, that they currently must travel outside the neighborhood to purchase.

I understand and share the frustration that many of the Hedger residents feel, having just lived through a complete renovation of their building and now facing the prospect of construction next door. But this temporary inconvenience will lead to a new development that will greatly enhance the quality of their lives and lives of those who live in the building for years to come. This is why 58 Hedger residents signed a petition in support of the Concord development.

IV. Conclusion

The Concord at Sheridan development represents an important step in advancing my goal of preserving Rogers Park’s unique diversity, while providing the kind of economic development that other neighborhoods enjoy. It provides housing both for those who otherwise could not afford to live in our community, as well as those who have disposable income to support the local economy. And it brings to our community a retailer that serves people of all incomes, offering products that everyone can use, and providing jobs and opportunity for our residents who need them. This is no doubt why the proposal enjoys the overwhelming support of the residents of the 49th Ward and surrounding communities.

In short, this development is good for Rogers Park and I salute the CHA and its Executive Director, Eugene Jones, for their vision in putting forth this proposal.

Finally, I want to thank everyone who took the time to attend the community meetings and/or express their views on the proposed development. Our community is filled with people who care passionately about their community. It is one of our ward’s greatest strengths.

If you have any questions or further comments regarding my decision, please feel free to reply to this email.